Investors have taken $111 billion out of passive equity funds in the past year.

Investors are leaving equity funds out in the cold, according to the latest Morningstar data.

In January, investors took close to $14 billion out of active U.S. equity funds. In the past 12 months, these outflows totaled $111 billion.

But it’s not just active U.S. equity funds that are losing investors, passive U.S. equity outflows reached nearly $3 billion last month, the research group says.

“The most interesting development, looking at the January numbers, is the negative flow for passive U.S. equity,” Morningstar senior markets analyst Alina Lamy explained in the latest report, released Friday.

“The established trend, in recent months, indicated strong outflows from active U.S. equity (a trend that is continuing) and inflows to passive U.S. equity (which did not happen in January,” Lamy stated. “One ETF, SPDR S&P 500 (SPY), was largely responsible for the passive U.S. equity outflow this month.”

SPY had outflows of $26.2 billion last month. According to Morningstar, this is the second-largest monthly outflow in dollar terms from any fund or ETF on record. (It lagged behind PIMCO’s Total Return Fund (PTTRX), which has outflows of $32.2 billion in October.) SPY’s drop represented a 12% decline in assets.

The drop in SPY, says Lamy, is likely due to sales by active fund investors and hedge fund managers, who use SPY as equity holdings in portfolios at the end of the year. In January, they tend to sell SPY and purchase individual stocks. This has generally been the pattern for the past five years.

In contrast to the equity outflows, all other active Morningstar category groups had positive flows in January, especially municipal-bond and sector-equity funds. Inflows into active funds reached $470 million.

Passive funds, though, outpaced these inflows with $26.1 billion of additional assets. Taxable-bond funds led passive products with inflows of $10.9 billion.

Meanwhile, PIMCO funds had $14.5 billion in outflows, with the Total Return Fund losing $12.5 billion in January. Overall, Morningstar says, the fund family has lost close to $165 billion over the past 12 months: a 31% decrease in assets.

Inflow Updates

In terms of top inflows by fund families, Vanguard topped the charts with $3.3 billion into actively managed products and $30.9 billion in passive flows. BlackRock/iShares saw inflows of $2.0 billion and $4.8 billion in these categories, respectively.

Other winners were JPMorgan (JPM), with active flows of $2.3 billion, and American Funds, with $1.9 billion into its active funds. “American Funds had its best month of inflows since May 2009,” Morningstar said.

As for individual funds, the Metropolitan West Total Return Bond Fund led the pack of active products with $5.2 billion of inflows in January, followed by the DoubleLine Total Return Bond Fund at $2.6 billion and BlackRock’s Strategic Income Opportunities Portfolio, $2.0 billion.

On the passive side, the Vanguard Total Stock Market Index Fund attracted $7.6 billion, the Vanguard Total International Stock Index Fund drew $3.4 billion, and the Vanguard 500 Index Fund brought in $3.0 billion.

Morningstar says that 65% of assets held in passive funds are invested at an expense ratio of 0.10% or lower, while 65% of total active assets are invested at an expense ratio of 0.90% or lower. Over half of active assets are invested in funds with expense ratios between 0.60% and 1%.

— Check out Why Active Managers Fail (and Why You Shouldn’t Fire Them) on ThinkAdvisor.